ShareThisIn 1989, Steve Wynn's Mirage ushered in a megaresort era marked by a wave of themed and whimsical luxury hotels.Now, Atlantic City - reeling from competition for penny-pinching slot players - is on the cusp of a sort of salvation, as experts predict a Las Vegas-style transformation of the aging seaside town.At least three casino operators - each with connections to Wynn and his epic-making Mirage - are pursuing luxury resorts in Atlantic City even as the East Coast gambling mecca is reporting its first annual decline in gaming revenue since the first casino opened there in 1978.Their confidence, not surprisingly, springs from Las Vegas, which hasn't always had growth years either.Strip revenue, when measured year-over year, has fallen three times over the past two decades - in 1996, 2001 and 2002. The largest drop was but 2 percent in 2001, as a result of the 9/11 terrorist attacks. In 1996, the Asian banking crisis slammed global stock markets and hurt high-roller play on the Strip, resulting in a 1.4 percent decline.The closest comparison to the trend in Atlantic City is the spread of tribal casinos in California, the Strip's largest feeder market. And though some consumers may be taking fewer Las Vegas trips as a result, Vegas can't directly attribute any slowed growth to California casinos. In fact, there's some evidence that easier access to gambling spurs interest in Las Vegas, which hosts the biggest poker tournaments and offers more eye candy.With only 11 casinos - and only one of them built in the past 15 years to the luxury standards of the Strip - Atlantic City is far from Las Vegas by any definition.When Boyd Gaming opened the Borgata resort with MGM Mirage in 2003, the resort soon became the biggest and most profitable revenue generator in Atlantic City, with some of that growth coming at the expense of other casinos in town. The Borgata also is attracting new, more discriminating customers who wouldn't otherwise travel to Atlantic City.Though some wonder whether Atlantic City's proximity to multiple gambling markets will make it hard for the city to rise much beyond its roots as a gambling fix for day trippers, others say the city is primed for Las Vegas-style growth.Here's what's in store for Atlantic City:- MGM Mirage is planning a $5 billion resort with at least 3,000 hotel rooms called CityCenter East.- Revel Entertainment, with investment bank Morgan Stanley, is proposing an oceanfront resort with two hotel towers of 1,900 rooms each.- Pinnacle Gaming, which bought and imploded the old Sands casino in Atlantic City, envisions a major resort there.There's already evidence that the Borgata's nongaming attractions are motivating customers to stay longer than one night - which might otherwise be enough for a quick gambling fix.On the Strip, where nongaming spending is nearly 50 percent of the total, fancy dinners, expensive baubles and elaborate entertainment are helping offset only moderate growth in gambling revenue. In Atlantic City, nearly 80 percent of revenue comes from gambling, though that number is as low as 65 percent at the Borgata.The best indicator of Atlantic City's development as a resort destination, experts say, comes down to a hard-and-fast number.New Jersey's gaming tax, which comes to about 9 percent with state and local assessments, is the second-lowest in the nation next to Nevada's rate of 6.75 percent. And if the Nevada teachers union gets its way, a statewide petition could raise Nevada's towline gaming tax to 9.75 percent - putting New Jersey in the financial lead, so to speak.With the Strip becoming saturated and riverboat markets across the country becoming a more competitive place to make a buck, Atlantic City - which sits next to one of the largest and most dense affluent populations in the country, with New York on one side and Philadelphia on another - has become more appealing for long-term investors, analysts say.The Borgata experiment, coupled with New Jersey's low tax rate, is paving the way Atlantic City's first wave of multibillion-dollar resorts."The future of Atlantic City is its evolution into a Las Vegas-style multi-entertainment destination resort," said Harvey Perkins, an analyst with Spectrum Gaming Group, a global gaming consultant based in Atlantic City. "Just as the tens of thousands of slot machines (in California) have had no material impact to Las Vegas, if Atlantic City is properly capitalized due to its low tax rate, the same should prove to be true here."(Distributed by Scripps Howard News Service, www.scrippsnews.com.)
Developers set to transform Atlantic City
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